Is doing Short Sales with an Option contract better than using land trust?

Foreclosures, Short Sales, Tax Foreclosures
1

I know that “tcowan17” prefer to do SS with an option contract than land trust.

Does anyone else follow this method? :bobble

2

Yes.

Not yet.

3

Option contract yes - to get the ball rolling and the homeowner locked in with you. Land Trusts are not covered through Title Ins and lenders are catching on to this as well. Plus they are harder to influence the homeowners to sign - it’s much like having the deed or power of attorney. An Option you can back out of or move forward by exercising your option with a purchase contract. I personally think the other route is not in the best interest of the homeowner.

4

I find Trusts very shady and never use them. Far as I know, the only reason you’ll need a Trust is to get your buyer FHA approved… so I have to sell it to a non-FHA buyer.

5

Do you get your money/spread by releasing the option for payment or you do a back to back deed transfer?

Please be specific, because I think this method may change the way things are done in the pre- foreclosure biz.

Thank you everyone.

6

I do back to back closing. You can do the release of contract method also, but then you have to get the original seller more involved with a new form to sign and reveal how much you sold his house for and how much he’s now going to have to give you back at closing.

‘Ok, I dont want the house any more, but I found a new buyer and I need you to agree to pay me $25,000 at closing’

Can your seller still sell while under your option contract? IMO an option contract should lock you in at a price, but the seller can still sell if possible. Other wise it makes no sense for the seller.

7

You need to do a back to back transfer with the option, if this is your best exit strategy.

The problem with getting paid for a release of option is that it makes the transaction a single transaction event as opposed to a back-to-back closing.

The final HUD detailing the transaction will therefore look different from the negotiating HUD provided to the lender being asked to take a discount – and that lender will kill the deal.

8

Could someone explain an option contract and the advantages of using one in a SS. The first time I heard about this was about a month ago, but I still dont have a clue. Does anyone have a sample??

9
  1. Gives the investor specified control
  2. Gives the investor the right to market and sell
  3. Gives investor a vehicle to avoid ownership liabilities
  4. Allows the investor to reduce financing and closing costs
  5. Allows the investor to structure back-to-back closings
  6. Avoids the issues found when using a land trust to structure a back-to-back closing
  7. Insurable
10

SUPERIOR to LT

http://www.instantteleseminar.com/?eventid=2638596

11

Under an option, if requested an owner is bound to sell within the specified time period at the specified price. Therefore, they cannot sell to someone else without violating their obligations under the option contract. Many investors will file a “Memorandum of Option” with the county clerk, to cloud the title and put others on notice that the property may be “spoken for”.

12

Thanks NJSS. You provided a very valuable link.

13

I have a new deal in NJ and Im going to use an option contract. My last two SS were double closings with trust docs. Let’s see how it goes…

14

Hi Moziah1,

I am a new investor from S.I New York. I’d like to hear how your deal is going using option contract.

Best of luck to you.